May. 12, 2013 - 06:00AM
|

WASHINGTON — President Obama should apologize for the admission by the IRS that it singled out conservative tea party groups for extra scrutiny as they applied for non-profit status, Republican members of Congress said Sunday.

They also called for an investigation of the agency.

Sen. Susan Collins, R-Maine, said the IRS actions were “truly outrageous” and “chilling” on CNN’s State of the Union. A public apology was “absolutely” needed, Collins said. “I think that it’s very disappointing the president hasn’t personally condemned this and spoken out. ... (T)he president needs to make it crystal clear that this is totally unacceptable in America.”

“I don’t care if you’re a conservative or a liberal, a Democrat or a Republican — this should send a chill up your spine,” Rep. Mike Rogers, R-Mich., said on Fox News Sunday.

Darrell Issa, the California Republican who leads the House Oversight and Government Reform committee, said on NBC’s Meet the Press the initial apologies from the IRS have been insufficient. An inspector general’s report that examined the issue was leaked by the administration, he said, so that its impact would be lessened.

“This mea culpa is not an honest one,” Issa said.

Collins, Rogers and Issa spoke in reaction to an admission Friday by Lois Lerner, the IRS director of exempt organizations, that employees in the agency’s Cincinnati office routinely required conservative groups seeking non-profit status to undergo more extensive scrutiny than other groups seeking such a designation.

Lerner said Friday she had learned only last year through news reports of the extra hoops the IRS required applicants to jump through, but a draft timeline compiled by the agency’s inspector general showed Lerner had learned in 2011 that her unit was targeting tea party groups for additional scrutiny. The actual inspector general’s report has not been released but is expected this week.

The timeline was part of a report by the Treasury Inspector General for Tax Administration, which has been investigating the IRS’ treatment of tea party groups at the request of Congress. The report is expected to be critical of the IRS actions. Excerpts obtained by USA Today provide a timeline investigators compiled through e-mails and interviews with IRS officials.

It shows that on June 29, 2011, IRS officials in Cincinnati told Lerner how they were handling applications for tax-exempt status for tea party groups. Certain groups, the briefing paper showed, were subjected by the IRS to further investigation based on politically loaded terms in the tax-exempt application file. Groups were singled out for enhanced scrutiny if:

• The words “tea party,” “patriots,” or “9/12 project” appeared anywhere in the group name or case file;

• The group’s stated issues included government spending, government debt or taxes;

• The organization had a goal of educating the public via advocacy or lobbying to “make America a better place to live;”

• Any statements in the case file critical of how the country is being run.

Under those criteria, 100 groups had their applications sent to a dedicated team of specialists for further investigation — adding months to the approval process, according to the report.

Concerns raised in briefing

During the 2011 briefing, Lerner raised concern about those criteria, according to the inspector general’s report. So in January 2012, the office sent out a new set of criteria in a BOLO memo — meaning “be on the lookout” — for “political action type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform/movement.”

The additional scrutiny for tea party groups often delayed approvals of their tax-exempt status for months, and the IRS said Friday that about half of all applications affected are still pending.

The tea party groups were seeking tax-exempt status under a provision of the tax code for social welfare groups — so-called 501(c)(4) organizations. Unlike other charities, these groups are allowed to engage in political advocacy as long as it’s not their primary purpose.

The additional information requested of tea party groups often included requests for donor lists, which the IRS later admitted was inappropriate and “troubling.” tea party groups who protested were told they didn’t have to submit the information, and those donor lists that were submitted have been destroyed, IRS officials told the inspector general.

IRS officials could not be reached for comment late Saturday or Sunday.

The chairman of the House Ways and Means Committee, which oversees tax laws, said the committee will hold hearings soon. “We will hold the IRS accountable for its actions,” said Rep. Dave Camp, R-Mich.

The inspector general’s draft timeline also raises questions about the repeated denials by IRS officials that they were singling out tea party groups.

In a March 2012 Ways and Means subcommittee hearing, IRS Commissioner Douglas Shulman gave explicit assurances that the IRS was not targeting tea party groups. “What’s been happening has been the normal back-and-forth that happens with the IRS,” he said. “And so, there’s absolutely no targeting.”

In an April 2012 letter to the House Oversight Committee, Lerner said the IRS’ questions to tea party groups were “in the ordinary course of the application process.”

tea party groups said the government’s activities were “criminal.”

“The IRS lied. They lied before Congress in 2011 and they lied again yesterday. We must know how many more lies they have been telling and how high up the chain the coverup goes,” said Jenny Beth Martin, national coordinator for tea party Patriots, in a statement.

Changes in jeopardy

The growing controversy could jeopardize separate efforts underway in Congress to force the agency to crack down on non-profit political organizations, observers say.

“This is going to be fodder for partisan warfare in Congress,” said Richard Hasen, a campaign-finance expert who teaches law at the University of California-Irvine. He said congressional hearings are justified.

“At the very least, it’s a distraction for the IRS,” he said. “At the most, it will significantly dampen efforts to rein in shadowy” groups.

Campaign-finance watchdogs, along with a handful of mostly Democratic lawmakers, have put increasing pressure on the IRS to more closely monitor the actions of self-labeled “social welfare” organizations — arguing these groups have abused the tax code to mask their funders.

These tax-exempt groups can conduct political activity, but it cannot be their primary function. Experts say that groups are spending as much as 49% of their money on politics, instead of a minimal amount.

In the 2012 election, social welfare groups — led by Crossroads GPS, an organization linked to Republican strategist Karl Rove — spent more than $254 million on last-minute advertising to shape the outcome of the presidential and congressional elections, according to a tally by the Center for Responsive Politics, which tracks political money.

None disclosed its donors.

Bills in the House and Senate would require top donors to put their names on any political advertising they helped fund. Previous efforts to pass similar measures have failed. Proposed legislation introduced last month by Sens. Ron Wyden, D-Ore., and Lisa Murkowski, R-Alaska, also would give the IRS the power to temporarily revoke the tax-exempt status of serious violators.

Wyden said political operatives are “masquerading as tax-exempt social welfare groups.”

“The IRS has refused to take on its clear responsibility to interpret and enforce the existing law when it comes to these tax-exempt ‘social welfare’ groups that injected massive amounts of dark money into the 2012 elections,” he said.

David Keating, president of the Center for Competitive Politics, which favors fewer campaign-finance regulations, said the IRS incident “proves Congress should not pass pending legislation to give the IRS more power over advocacy or political groups,”

“The agency abuses that power, doesn’t understand the need to exercise it with caution or is simply incompetent to exercise it with care,” he said.

David Vance of the Campaign Legal Center, one of the campaign-finance watchdog groups urging the IRS to investigate social-welfare groups, said that “the goal of this political storm is to scuttle the IRS cracking down on the larger abuses.”

“I hope this doesn’t cause them to turn around with their tail behind their legs and leave the field,” he said.

New groups scrutinized

The IRS action disclosed Friday did not involve groups that had already secured their tax-exempt status and were active in politics.

Lerner said what happened in Cincinnati won’t affect the agency’s ability to investigate other tax-exempt groups for improper political conduct. Officials who conduct those reviews are “used to looking at organizations in a very different way,” she said.

Those reviews are done by staffers in Dallas, who submit allegations to a review panel, which decides if further investigation is warranted. She said the episode has further sensitized the IRS to avoiding even the appearance of political decision-making. Lerner made her apology at a meeting of the American Bar Association’s exempt organization committee in Washington.

Suzanne Ross McDowell, a partner with Steptoe & Johnson who heads that committee, said the IRS has been inundated with new applications for tax-exempt organizations ever since the U.S. Supreme Court decided in 2010 to allow direct corporate and union spending on independent political advertising.

“But there is a lot of uncertainty about how you draw the line between intervention in a political campaign, and other activities that are not intervention in a political campaign, such as issue advocacy,” she said. “These are very tough questions, and I don’t think any of us have the answer.”

Richard Briffault, a campaign-finance expert at Columbia Law School, said the IRS has a legitimate responsibility to examine whether organizations that receive tax protections have appropriately limited their political activity. But, as non-profits proliferate, the agency has been pressured to play a larger role in helping to uncover donors who critics say choose to fund social-welfare groups just to hide their political contributions.

“If Congress were to develop more effective rules for campaign-finance disclosure … some of this problem would go away,” Briffault said. “That doesn’t look like it’s happening anytime soon.”